August 9, 2019 / 1:39 PM / 4 months ago

Texas power demand to hit record high next week as heat bakes state

Aug 9 (Reuters) - Demand for electricity in Texas will reach record levels next week as consumers crank up their air conditioners to escape a heat wave baking much of the state, according to projections by the state's power grid operator.

High temperatures in Houston, Texas' biggest city, will near 100 degrees Fahrenheit (38 Celsius) every day through Wednesday, according to AccuWeather forecasts. The normal high in Houston at this time of year is 96 F (36 C).

The U.S. National Weather Service issued heat advisories for much of Texas, Louisiana and Mississippi. In Houston, the weather service said the combination of heat and humidity would make it feel more like 106 F to 113 F (41 to 45 C) on Friday.

The Electric Reliability Council of Texas (ERCOT), grid operator for much of the state, forecast that heat would push peak demand to more than 73,000 megawatts (MW) on Friday, 75,000 MW on Monday and 75,500 MW on Tuesday. The current all-time high is 73,473 MW on July 19, 2018.

Demand on Thursday rose to a preliminary 72,304 MW. Earlier on Thursday, ERCOT forecast the day's peak would top 73,800 MW.

One megawatt can power about 1,000 U.S. homes on average, but as little as 200 during periods of peak demand.

Despite high demand, next-day power prices at the ERCOT North hub EL-PK-ERTN-SNL traded well below their one-year high of $209.25 per megawatt hour for Wednesday at just $57 for Thursday and $70 for Friday.

ERCOT has over 78,000 MW of generating capacity to meet demand this summer, but warned low reserves could force it to issue more alerts urging customers to conserve energy than last year.

ERCOT has said its planning reserve margin for this summer was a historically low 7.4% because several generators have been retired even though demand is rising.

The reserve margin is the difference between total generation available and forecast peak demand, with the difference expressed as a percentage of peak demand.

Generators are being retired because power prices have declined for years as growing supplies of cheap natural gas from shale formations, like the Permian in West Texas, flood the market. Gas produces a little less than half the state's electricity.

Lower power prices make it difficult for some generators, like those operating old coal-fired plants, to make money selling electricity.

Ercot North prices fell to an average of $33.87/MWh over the past five years (2014-2018) from $41.37 during 2009-2013 and $59.19 during 2004-2008.

Reporting by Scott DiSavino; editing by Jonathan Oatis

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